COMMISSIONER, TRADE TAX Vs. PRATAP ENGINEERING WORKS

JUDGEMENT

(1.) Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 7th April, 1997 for the assessment year 1988-89.

(2.) Dealer/opposite party (hereinafter referred to as "Dealer") was carrying on the business of manufacture and supply of Railway signals and machinery parts. During the year under consideration, dealer had been awarded a contract No. N/B.G./1/4/1, dated 01.06.1987 by Eastern Railway for the designing and supplying of system, equipment with erection, testing, commissioning at the Railway Stations, namely, Naugchchiya, Kharik, Thana Bihpur and Narayanpur, which were all part of Barauni-Katihar section of Eastern Railway. The value of the contract was Rs. 40.99 lacs. This is the contract in dispute. The dealer had also executed the other contracts, which are not in dispute. Tribunal found that the dealer had a workshop at Thana Bihpur, district Sainastipur (Bihar) and during the year under consideration transferred the goods for Rs. 10,62,700/- from Gorakhpur workshop to its workshop Thana Bihpur, district Samastipur. Tribunal found that the items, which were transferred, were in small pieces and in a semi-finished fabricated form, out of which signal equipment have been manufactured at the workshop at Thana Bihpur, district Samastipur and, thereafter, used in the contract namely, erection, supplying and commissioning of signal. Dealer treated the transfer of various items for Rs. 10,62,700/- from its Gorakhpur unit to the Samastipur as a stock transfer. Goods were despatched through stock transfer memos and in the challans consignee and consignor both were the dealer. Goods have been received at the workshop situated at Samastipur. Goods included both imported goods as well as purchased within the State of U.P. Applicant claimed that the movements of such goods were by way of stock transfers. Assessing authority had rejected the plea of the dealer and treated the movements as inter-State sales. Though, assessing authority accepted that the contract was in nature of works contract but held that the goods had moved from Gorakhpur unit to Samastipur for the use in such works contract and, therefore, it was deemed sale under Section 2 (h) of the Act. Assessing authority accordingly, treated the movement of goods as inter-State sales and levied the tax under Central Sales Tax Act. The order of the assessing authority has been confirmed in appeal by the first appellate authority. Dealer filed second appeal before the Tribunal. Tribunal by the impugned order allowed the appeal and deleted the tax. Tribunal on the facts and circumstances of the case, held that the movements of goods were by way of stock transfers and not by way of inter-State sales.

(3.) Heard learned Counsel for the parties.